In this series of articles, we will take you through the ins and outs of bad credit mortgages. Each article will discuss a particular topic having to do with mortgage loans for bad credit. We will cover shopping around for the right loan, understanding your credit, organizing your paperwork, submitting the application, getting the best deal and how to get the most out of a bad credit mortgage loan. These articles are geared toward purchasing a home but will also be helpful if you’re investigating a bad credit mortgage refinance.
Links at the bottom of each article will take you to the next section, or refer back to the beginning for the table of contents.
What are Bad Credit Mortgage Loans?
There are two main categories of mortgage loans available today. One is a Traditional mortgage; the other is a non-conforming or subprime mortgage, also known as a mortgage for bad credit.
Traditional Mortgages
- FHA – One of the more widely used mortgage programs, FHA loans provide a wide range of options but require a minimum credit score of 620.
- VHA – If you are, or have been a member of the armed forces, there are special mortgage programs available for you. Regardless of your credit situation they are worth looking into.
- Fannie Mae – These are what are commonly known as conventional mortgages. There are specific requirements , including a minimum of 2 years employment history and a credit score of 580 although most programs require 600 or more.
Subprime or Bad Credit Mortgages
There are a wide variety of bad credit loan mortgage programs available that do not meet the criteria of a traditional mortgage. They typically have higher closing costs, interest rates and fees, but they allow for a lower credit score. Some programs are available with low down payments.
Before shopping for bad credit mortgage lenders, be sure to investigate your credit score and know if you need a bad credit mortgage or if you can possibly qualify for a traditional mortgage.
Bad credit mortgage lenders may not be FHA or Fannie Mae approved lenders, so they may not be able to offer you those programs. Be sure to talk to a number of mortgage lenders before you make your final decision. Different lenders or brokers generally specialize in one type of loan or another. Remember to talk to a broker or lender who specializes in mortgages for bad credit if that is the type of loan you decide to go with.
In our next article, we will discuss finding your credit score, what the score means, and how to make the most of what you learn when you meet with a mortgage broker.
Ins and Outs of a Bad Credit Mortgage | Part Two: Should I Repair my Credit?
Here is a list of all the articles in this series:
Ins and Outs of a Bad Credit Mortgage | Part One: What are Bad Credit Mortgages?
Ins and Outs of a Bad Credit Mortgage | Part Two: Should I Repair my Credit?
Ins and Outs of a Bad Credit Mortgage | Part Three: How Much of a Bad Credit Mortgage Loan can you Qualify For?
Ins and Outs of a Bad Credit Mortgage | Part Four: Types of Mortgages for People with Bad Credit
Ins and Outs of a Bad Credit Mortgage | Part Five: Finding the Best Bad Credit Mortgage Lenders
Ins and Outs of a Bad Credit Mortgage | Part Six: Getting the Most out of Mortgages for Bad Credit
photo credit: kate.28